Wall Street Journal Writes: Who Wants to Be a Russian Billionaire?

 

MOSCOW—When it comes to household wealth, it seems Russia has come full circle.

In the days of the Soviet Union, the country boasted that all its citizens shared the wealth equally, but a new report has found that a mere 20 years after the end of Communism, wealth disparity has soared with 35% of the country’s entire wealth now in the hands of just 110 people.

“Russia has the highest level of wealth inequality in the world, apart from small Caribbean nations with resident billionaires,” Credit Suisse’s annual global wealth report says.

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After beating up on China for a while, it is now time for mother Russia. I highly encourage everyone to read the article above in full to gauge a better understanding.  

I am not surprised by the numbers above. If you are not aware, at least the first round of Russian Billionaires made their money from theft of Soviet Union resources. Most Billionaires in the western world had to work for it, but not in Russia. It was done by picking up the phone back in the early 1990s by a few very well connected people and saying “Hey Boris (Boris Yeltsin), can I have that Zink/Gold/Oil factory/refinery in Siberia, it is in disrepair anyway”.  If the Boris was drunk enough or happy enough or paid off well enough he would do you a favor and give you a factory. That was their secret. 

BOOM. You are now a Billionaire. While the explanation above is very simplistic, it is not that far from reality.

Either way you twist this, this is not a good state of affairs for Russia. Given its natural resources and the boom in the commodities market over the last 10-15 years Russia should be much further along. Yet, it is not.

This is of course the failure of its government and those in power. Given the situation I do not see a bright future for Russia.  While it will remain a powerful player on a global scale I don’t see how it can compete with either the US or even China in economic terms. Should commodity prices decline, expect Russian economy to dive into a deep recession (many argue its already there).

It is unfortunate, but some things never change.   

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